Tuesday, 18 September 2018
Public Accounts and Audit Committee; Report
On behalf of the Joint Committee of Public Accounts and Audit, I present report No. 473, Defence major projects report: inquiry based on Auditor-General's report 26 (2017-18). I move:
That the Senate take note of the report.
Every year the Department of Defence and the Australian National Audit Office work together to produce a consolidated review of selected major Defence acquisition projects, with the resulting report called the Major Projects Report, or MPR.
This year's MPR reviewed risks, challenges and complexities facing major projects in general, as well as the status of 27 selected major projects in terms of cost, schedule and forecast capability.
The total approved budget for the projects in this year's MPR was approximately $62 billion, covering nearly 59 per cent of the budget within the Approved Major Capital Investment Program of $105.9 billion.
The MPR is reviewed annually by the Joint Committee of Public Accounts and Audit. The committee's focus on Defence's business management goes to the core of the committee's work on effective public administration. Possible improvements in this area have focused on risk management approaches and the sometimes optimistic assessment of delivery of capability estimates.
The committee recommended reform in updating project maturity scores several years ago. However, Defence remains behind the committee's expectations and changes remain slow and uncertain. Defence indicates that there will be progress seen in the 2018-19 Major Projects Report, and the committee will continue to monitor developments in this area.
A significant continuing issue to the committee in its MPR review was the Auditor-General's second consecutive qualified audit finding on the ARH Tiger Helicopters project. The committee supports the Auditor-General's statement that audit standards require a judgement to be made on the substantive nature of an issue. Concerns remain about the status and costs of this project, requiring it to remain on the MPR in the near future.
The committee's report makes three recommendations aimed at continuing to drive improvements in transparent reporting of Defence major project expenditure, recommending that Defence report on:
I commend the report to the Senate. I seek leave to continue my remarks later.
Leave granted; debate adjourned.